The Hague Rules impose minimum tariffs on commercial carriers of goods by sea. The Hague Rules have been – for the most part since the nation’s independence – part of Malaysian law. Therefore, despite their many flaws, the Hague Rules have played a crucial role in greasing the wheels of Malaysia’s maritime trade.
However, from July 2021, the The Hague-Visby Rules have now been enacted in West Malaysia. With the enactment of this improved version of The Hague Rules, the law for the carriage of goods by sea in West Malaysia is now in line with that of Malaysia’s major trading partners and (perhaps more importantly) adapted to the trade of the 21st century.
This update will explore three key differences between the two sets of rules (as enacted by the Malaysian Parliament) and the thinking behind them.
- Maritime transport documents and their electronic forms
The two points to emphasize here are:
(a) protection under the Hague-Visby Rules is now granted to a wider range of documents. This is a radical change from the Hague Rules, which only applied to bills of lading; and,
(b) The Hague-Visby Rules provide for and extend their application to electronic forms of maritime transport documents, a form of documentation which was not contemplated by the Hague Rules.
The Hague Rules only applied “Contracts of carriage covered by a bill of lading or any other similar title deed”. This meant – in essence – that the protection afforded by the Hague Rules was only available when a bill of lading was issued. Protection was not available when parties issued delivery notes, waybills, sea waybills, etc., all documents issued regularly in the execution of domestic and international trade.
This restrictive approach was however removed by the Hague-Visby Rules with the protection offered by the Hague-Visby Rules now granted to bills of lading (negotiable or not), waybills, sea waybills, bills of lading. delivery of ships and any other document attesting to a contract for the carriage of goods by sea. This expansion reflects the modern needs of international trade where a multitude of documents are issued (apart from the bill of lading) to facilitate trade.
Another change has been to protect the aforementioned documents even when they are in electronic form. This again reflects the needs of 21st – the commerce of the century where the availability of commercial documents in electronic form will greatly facilitate international sales, transport, insurance, payment and finance, and customs.
It is heartening to note that this consideration of the electronic form of documents is part of recent developments on the international scene such as the UNCITRAL Model Law on Electronic Transferable Documents (formulated in 2017) which aims to modernize commerce. , the legal recognition given to electronic title documents in the United States through amendments to the Uniform Commercial Code in 2003, and the consultation paper titled “Digital assets: electronic business documents” published by the Law Commission of England and Wales in April 2021. It also complies with the urgent need to limit physical interactions in the wake of the COVID-19 pandemic.
Article III, Rule 6 of the Hague-Visby Rules reaffirms the traditional position that proceedings against the carrier and the ship are time-barred, unless the proceedings are instituted within one year of delivery of the goods. This is one of the most obvious features of The Hague and The Hague-Visby Rules.
The net result of this position is that an action must be brought against the carrier within a short period of time after unloading. The reason for this rule – it is said – is that carriers cannot be required to keep records for long periods of time and need to know quickly what claims they may be subject to.
The changes, however, now allow parties to:
- extend this period of one year by mutual agreement; and
- bring an action for damages against a third party after the expiration of the one-year period.
The effect of these changes is to allow the parties to dictate the pace of the litigation between them (if any) and to allow more time for a recourse action that might otherwise be time-barred.
The indemnification provision, in particular, would be useful when, for example, “A charterer seeks compensation under a bill of lading against a claim for which it is liable to the carrier or when a bill of lading transhells for part of the voyage, in each case the carrier itself becomes a shipper under” a second contract governed by the rules “.
- Limitation of Liability
The main reason for a limitation of liability remains that “Carriers may not know what’s inside the packages they are entrusted with, and if they do, they may not know what the contents are intended for.” “
The Hague Rules state that the carrier is entitled to limit its liability for any loss in connection with the goods to an amount not exceeding £ 100 per package or unit. The Hague Rules then state that currency units are to be considered a gold value, that is, the gold content of 100 pounds in 1924 (when the Hague Rules were made).
The net effect of this roundabout way of limiting liability is that it has become difficult to say with certainty the monetary value to which the carrier is entitled to limit liability.
The Hague-Visby Rules solved this problem by limiting the liability of the carrier or vessel for loss or damage in connection with the goods to an amount not exceeding 666.67 units of account per package or unit or two units of count per kilogram of gross weight of lost goods. or damaged, whichever is greater. The unit of account is the Special Drawing Right, which in turn is determined by the International Monetary Fund or by the state.
If, however, the nature and value of the goods have been declared by the shipper before dispatch and included in the maritime transport document, the carrier is not authorized to limit his liability.
The Hague-Visby Rules then deprive the carrier of the benefit of the limitation, when the “The damage results from an act or omission by the carrier committed with intent to cause damage, or recklessly and with the knowledge that damage would likely result”. This is a new provision which was absent from the Hague Rules. The conduct in question (i.e. the act or omission) must be attributable to the carrier himself, the mere fault of an employee being insufficient to break the limitation.
The Hague Rules in East Malaysia
Despite the many advantages of the Hague-Visby Rules, it should be noted for the sake of clarity that the Hague Rules remain in force with respect to the carriage of goods by sea from any port in Sabah or Sarawak to any port. whether inside or outside Sabah or Sarawak.
This difference in law is due to the unique constitutional provisions governing these two states and the separate legislation on the carriage of goods by sea in these jurisdictions.
The promulgation of the Hague-Visby Rules is long overdue and constitutes an important step in the development of Malaysia’s maritime laws. This latest development is the latest in a long line of maritime laws in Malaysia possibly dating back to the Undang-undang Laut Melaka (the “Maritime Laws of Malacca”).
It is hoped that the enactment of these rules will strengthen Malaysia’s reputation as a trading nation that is home to some of the busiest ports in the world.
If you have any questions about The Hague-Visby Rules in Malaysia, please do not hesitate to contact the author of this update, Clive Navin Selvapandian, who is both a member of the Malaysian Bar Admiralty and Navigation Law Committee and Treasurer of the Malaysian International Society of Maritime Law. Questions about vessel financing can be directed to Por Chuei Ying.
This update is provided by the Contact Partners listed above with assistance from Soh Lip Shan (Partner, Christopher Lee & Ong)